#47 – The Expat Files: Political Corruption and Legal Challenges in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:01] South of the border, down Mexico way. That's where I fell in love when the stars above came out to play. Hi everybody, I'm Johnny Mueller. And you're listening to the Exped Files. Living in Latin America. The one of a kind show that tells you what it's like to live, work, play and or retire in Latin America. So let's get started. Now today I want to start by making a few comments about what I've been reading in the papers lately down here. In fact, just this week, it's been all over the news down in Latin America that a Costa Rican court has just handed down a five year sentence for former Costa Rican president Miguel Angel Rodriguez.

[00:53] Now he has served between 1998 and 2002. And before I connect all the dots in the corruption puzzle down here. We have to go back in time a little bit to see why more than 20 Latin American presidents, past or present, are either in jail, under indictment, or are fugitives from justice at this very minute. If you remember some time back in one of my past shows, I talked about how in Latin America, during the 90s especially, governments were really big on privatizing state industries. That way they could get millions if not billions of dollars into the state coffers all at one time. And because there's almost no transparency down here, by the time the next government gets in, virtually all that money gained by privatizing somehow just vaporizes or disappears off the books.

[01:40] And in the case of former Costa Rican president Miguel Rodriguez, that's exactly what happened. But this time he got caught red handed with his hand in a till. It seems that when Costa Rica sold off its state telephone company and went private, the president took a two million dollar commission on that sale. Now, commission is what his lawyers called it in court, instead of what it really was, what the mafia would call Greece, or a two million dollar skim. Now, you might think it's not so uncommon, a president getting caught for a thing like that. It's no secret that all those high level politicians are fattening their wallets with any number of secret backroom deals. In fact, that's one of the reasons they spend so much money just to get elected. We know that stuff goes on all the time, and that goes for all medium and high level politicians, first and third world.

[02:30] I dare you to name just one politician who wasn't a hell of a lot richer when he left office than the day he walked in. Go ahead, I dare you, name one. The fact is, in the US, you'd have to go back almost 150 years, back to the days when Ulysses S. Grant left the presidency and he actually had to go out and find himself a real job again because he was dead broke. And in fact, some years later, when Mark Twain visited Grant and saw that not only was he bankrupt and destitute, he was in bed with a case of throat cancer and could barely speak. And that's when Mark Twain, who owned a publishing house, truly felt sorry for Grant, who was not only an ex-president, but the hero of the Civil War. And that's when Twain offered him a book deal on what became Grant's best selling autobiography.

[03:17] And that's the only way Grant pulled himself out of bankruptcy and debt. But nowadays, things are completely different. Every high level politician, first or third world, walks out of office a multi-millionaire. But let's get back to third world politicians now. Just pick up a newspaper any day of the week down here, and you'll see that presidents, vice presidents, cabinet members, senators and representatives, governors and mayors, and I mean especially mayors, are getting caught, usually for skimming, and going to jail all the time. Take, for example, the recent ex-president of Nicaragua, Arnold Alleman. He was president from 1997 to 2002. He was convicted of money laundering and got a 20-year sentence. And he's just one of more than 20 Latin American presidents that are in jail or under indictment right now.

[04:06] Then you've got Abdullah Bakkeram of Ecuador. An ex-president, who was impeached in 1997, fled the country, is in exile in Panama, and of course, that was for stealing public funds too. Big surprise. Then you've got Fabian Alarcon, who became the next president of Ecuador, and who got kicked out and spent his later years under house arrest. And then the next president of Ecuador, Jama Malhud. Wow, try saying that three times real fast. And he was in office from 1998 to 2000. Well, he somehow made it to the United States, and I think he's still there. But if he ever goes back to Ecuador, there's a grand jury waiting for him. Now, the next Ecuadorian president after him, Gustavo Naboa, who was president from 2000 to 2003. Well, after he skimmed his millions in public funds, he ended up in exile in the Dominican Republic.

[04:57] And you've got to wonder how so many of these guys end up in exile somewhere, and they never get extradited, but they end up living the life of Donald Trump with regular hair. And you can name a ton of examples, but I guess one of the most outrageous recent examples was everybody's favorite African despot, Idi Amin. And those friendly exile arrangements work something like this. If you're a high profile political figure, and you've stolen millions in public funds, almost any of the Banana Republics down here will take you in as a first class citizen. I mean, if you or I had 10 or 20 million dollars in our bank accounts, they'd take us in like royalty too. That kind of money creates a lot of jobs and wealth for the locals. So the way it works out, wherever an indicted, deposed, or disgraced ex-president wants to park his helicopter,

[05:47] build his mansion, and drive his hummers, well, that's okay with almost any neighboring third world Banana Republic. As long as he's not wanted by a first world country, they'll take him and his money in with almost no fuss at all. But let's get back to our Latin Presidential Hall of Shame. Let's talk about President Juan Carlos Ramosi of Paraguay, who was president there from 1993 to 1998. Well, he was sentenced to four years in jail, but an appeals court stacked with his friends, relatives, and appointees reversed the decision. And then we have President Raul Cubas, who succeeded him as Paraguay's president in 1999, after he skimmed his millions, ended up fleeing to Brazil, and naturally, he was given political asylum too.

[06:33] Don't you like the way one country's hand down here washes the other? You know, a lot of us expats think that there's kind of a corrupt president's club down here. And when they all get together at these first class resorts, they make a solemn pact and agree that if any one of them gets caught or indicted, there will always be a friendly country or two ready and willing to take him in on quick notice. Now, after President Cubas fled to Brazil, the next guy, Luis Gonzalez Maci, became president until 2003. And he's under house arrest for skimming $16 million of public funds. And while we're at it, how can we forget one of the most famous presidential corruption cases of all? Ex-president Fujimori of Peru. And we all know that story. He got sentenced to 25 years for skimming and a list of other crimes.

[07:22] And we can't forget about Venezuela here. Now, before our buddy Hugo Chavez took the reins and decided not to let go of them, there was a guy named Carlos Andres Perez who served a couple of terms that ended in 1993. And the guy's been under house arrest ever since. And what do you think he was arrested for? Stealing public funds, of course. And when these guys steal, they don't steal small. When all is said and done, these guys never steal less than a million or two. And I know once in a while you'll read up in the first world papers that a mayor or a senator or a congressman receives some kind of gift or cash payout or some kind of illegal campaign contribution, sometimes as small as five or ten thousand dollars. And even after accepting a gift for such a small amount like that, the guy's reputation is ruined and he almost always gets kicked out of office.

[08:09] And after that, he's pretty much forever barred from political life. But down here, every country seems to have so many political parties, it's actually a huge political revolving door. And it's really not uncommon at all for, let's say, a mayor in Nicaragua who's been convicted of skimming and who's actually done some jail time to pop up a few years later as a presidential candidate. And oftentimes he'll win. In fact, there don't seem to be any laws on the books down here like they have in the first world that say if you're a convicted felon, you can't run for public office. And expats are always surprised when they pick up the paper, if they read enough Spanish, that is. When they see the list of presidential candidates and the bios on these guys. Now, I would say a good third of these guys have been prosecuted for one crime or another.

[08:56] And some, of course, have done time. But talk about short memories. If you think that up in the first world that the voters have amnesia, down here, they're absolutely deaf, dumb, and blind. And the thing is, down here, even if a politician is charged with a crime and makes it all the way to court, which could take years. Well, it's such a buddy-buddy system, even in the courts. A lot of judges are just afraid to hand down big sentences. Knowing that when they prosecute an especially high-level politician, not only do his tentacles run deep, he might just pop up again in the future in a position of power. And then, of course, he could exact his revenge and the judge would be screwed. So, in effect, when it comes to prosecuting high-level guys, local judges are just plain cowards. And add that to the fact that most judges down here aren't adverse to taking up bribe or two themselves.

[09:47] So it turns out that down here, at least two-thirds of the political corruption cases that actually make it to court get dismissed somewhere along the line or they get overturned in the appeals process. And one high-placed attorney in Panama told me that generally, in cases like these, about 50% of the witnesses either don't show up at all when called to testify or they get a case of selective amnesia. And while I'm talking about presidents under indictment or being prosecuted right now, we can't forget the case in Guatemala of Alfonso Portillo, who served as president of Guatemala from 2000 to 2004, who is accused along with some of his cabinet members of stealing $120 million in public funds. And since he opened up bank accounts in his ex-wives and children's names in France and in the United States,

[10:38] so now, along with his crimes at home, he's got to face money laundering charges in the first world too. That means, after his trial is done in Guatemala, he's set to be extradited and tried in both countries. Now, his vice president at the time, a man named Reyes Lopez, already did a couple of years in jail himself and is out already, and his indictment came through a fraudulent public real estate scheme. Oh, and did I mention that before he went to trial, ex-president Portillo was in exile in Mexico. Now get this, here's the real shocker. Mexico is a country that's been holding on to two warrants for Portillo's arrest on murder charges. Murder warrants that were issued way before Portillo ever became president. Because it seems, when Portillo was a young guy, he went to college in Mexico and got in a bar fight and shot two guys dead.

[11:28] And after that, he slipped right back into Guatemala and began his political career. And all that time, Mexico was holding a warrant for his arrest. And when Portillo became president of Guatemala, he automatically got international diplomatic immunity, which all presidents get. And the way international treaties and agreements are made, if you have diplomatic immunity like that, you don't even have to worry about murder charges, because those two are absolved. But still, you have to wonder why Mexico would accept a guy like that as in exile after his indictment in Guatemala, even if he was now a very wealthy ex-president. He must have been, to so many Mexicans way of thinking anyway, a very unlikely candidate for exile in their country. But they gave it to him for something like four years,

[12:17] and he moved right in with his bodyguards and hummers and private planes and helicopters and luxury suites. And of course, that $120 million to draw on. Now, I know for you first world listeners, that's got to be a very hard story to believe. But for me, it's not so much about taking in a guy with two murder warrants against him. It's the fact that the Guatemalans would vote for a guy for president who had two outstanding murder warrants against him in a neighboring country. Now, that would be like voting for a guy for president in the United States who had two outstanding murder warrants against him in Canada. And for first world people, that just would be unimaginable. So I bring up that case of Portillo's because it shows you everything you ever wanted to know about ethics in politics down in Latin America.

[13:06] There just ain't any. Then again, when you talk about politics in the first world, technically, five out of six of the last US presidents could be considered war criminals. So I guess by those standards, Portillo doesn't look so bad. He only killed two. And who knows? It might even have been in self-defense. But let me get back to that case I originally started with, Costa Rica. And of course, you all remember that people call Costa Rica the Switzerland of Latin America. At least if you go into a first world travel agency or look it up on the Internet, that's a slogan they like to use all the time. So let me just repeat this news article I started the show with. Ex-Costa Rican president Miguel Rodriguez just got sentenced to five years in prison for receiving a $2 million kickback in the public telephone sale.

[13:54] Well, I'll bet you didn't know that there was another ex-Costa Rican president. His name was Rafael Calderon, and he served from 1990 to 94. He just received a five-year sentence for skimming millions of dollars from a loan to Costa Rica that was granted by the government of Finland. And I'll bet you didn't know that ex-Costa Rican president Jose Figueres, who served from 1994 to 1998, well, he fled the country and has been living the last few years in Europe on the millions that he's accused of skimming from the government coffers. And if he ever comes back, which he probably never will, he'll face charges and a couple of grand juries too. So let me just sum this up. That beautiful little country of Costa Rica, considered by so many first world people to be the Switzerland of Latin America,

[14:41] well, in the last 20 years, two presidents have been jailed. And there's one, if he ever comes back to Costa Rica, who will most certainly do some time in the big house too. So three out of five of the last Costa Rican presidents are dyed in the wool crooks. And like I said previously, it's even worse in some of the countries like Paraguay. Now, you have to wonder how a guy could rise so high in political life, only to take a fall like that when he's reached the pinnacle of his career. I mean, all the little steps he took and the deals he made to get up the ladder must surely have been known by his cabinet members and his inner circle. So in some way, it seems like everybody at the top is on the take. Now, I'm not saying that the first world is all that much better. I do believe that Obama, both Bushes and Clinton, if someone in their inner circles actually revealed all of their dirt, they'd surely go to the big house too.

[15:35] Because we all know that in the United States at least, when a person first becomes president, he may be a wealthy man, but he always leaves office a hundred times richer. Take Clinton, for example. If I remember, his net worth was about a half a million when he first became president, and I believe now it's about 50 million. And there's something very wrong with that. So when you compare high-level politicians in Latin America with high-level politicians in the first world, their corruption is endemic. But it seems like in the first world, they're able to keep a tighter lid on it. And down here in Latin America, it's just a free-for-all. And the voting public down here are just as stupid, gullible, and uninformed as the people in the first world. But down here, the voting public is honest about being ignorant.

[16:22] Whereas up north, people actually think they know their candidates. But in reality, if you've really put the time in and have studied it, you'd find there isn't a dime's worth of difference between any of the candidates or their parties. And that goes for the first world and the third world. Now here's another interesting thing that happens. When a political bigwig gets caught down here, whether he's skimming, taking kickbacks, or just has his hand in the till, it seems that in almost all cases, if he's caught in a local crime and he's tried by the judicial system within his own country, in other words, if it's a local crime and international courts are not involved at all, you'll find that probably 80% or 90% of the time, there'll be a big show trial that'll drag on a year or two. And unlike in the first world, there'll always be reports of threats to the witnesses and even death threats to the judges.

[17:12] And then those judges will be dismissed for new ones, and the new ones will get a set of bodyguards, and then the whole trial will start up over again. And by the time the process drags out a few years, the trial will have lost all its momentum. And by then, chances are there'll have been another round of elections and a whole new government with all new people might be in place. And imagine what that does to a government's prosecution team. So it's very predictable and always the same old thing. When a high-level government official ends up in court, the longer it drags on, the more likely the case will be dismissed. And believe me, these high-level politicians who skim money, they got the resources to hire batteries of lawyers to drag the thing on forever. And they do. And now let me tell you about another neat trick that the defense often pulls down here when things start to look a little bleak for their client.

[18:03] The trial itself will be inching along, and you'll read about that in the pages of the paper almost every day. Then one day in the paper, you'll read that the defendant has been transferred to a private hospital. And when that happens, everybody gets some time off, whether it's days, weeks, or months. Everybody's got to wait until the doctors say that the defendant is well enough to come back into the court. And that's the trick. Down here, in a high-profile trial, if a defendant claims he is sick or he's in no physical or mental condition to attend the trial, he can request a doctor or a psychiatrist to come in, and if he's considered unfit or sick in any way, that can immediately stop the trial, and the defendant immediately gets transferred to a hospital. Now, of course, these guys have been accused of stealing millions, so they're all loaded.

[18:50] And there's no law that says they have to get admitted to a third-rate public hospital where there's probably no water, towels, Kleenex, or even gloves. So, 99% of the time, in these big-time political cases, the defendant ends up in a high-class private hospital that's more like a Marriott hotel, only all his cronies are hanging around, just like old times. And this can go on for months and months and months. And you can always tell when these kind of medical shenanigans are being pulled off. The once-strapping politician defendant, who started the trial with an attitude of spit and vinegar with his $1,000 suit, laptop, and blackberry, suddenly, a few weeks later, he gets rolled into the courtroom in a wheelchair, hunched over in a ball in a typical hospital smock, with a couple of IV bags dangling over his head.

[19:38] It's a great act, alright, and nobody can do a thing about it. Now, a high-profile crook with a lot of money can pull that in his own country, but he's in for big trouble if some first-world country has brought up charges against him. For example, if he's shifted some of that ill-gotten gain to one of the banks in the first world, like ex-president Portillo did, he may be able to manipulate all the locals and eventually get out of it with just a slap on the hand. But once first-world bank transfers are involved, it's a different ballgame. And after he's been tried for his crimes in his home country, he'll be processed for extradition. And as an aside, let me just mention that when a high-profile case down here gets prosecuted successfully, and it's a crime that was committed within the borders of the country itself, no matter how many years the guy gets, whether it's five or ten or twenty,

[20:26] he usually walks in two or three. And on top of that, he almost always gets a ridiculously low fine compared to the amount of money actually stolen. Now, take for example the case of a mayor of a medium-sized town down in El Salvador. He was accused and convicted of skimming $7 million from a $20 million road construction project. And he was sentenced to five years in jail with a fine of $12,000. Now, there hasn't been a single case that I've ever seen in all the articles I've read where the government has ever got back the money, because it takes so many years to resolve these cases that the stolen money has long since taken flight. So in this case, a mayor of a town skims $7 million, gets five years, he'll be out in two, and wow, he gets a $12,000 fine.

[21:13] Well, that just means for the rest of his life, he'll be knee-deep in Rolexes, Dancing Girls, and Jacuzzis, let me tell you. It's just amazing the quantities of money these guys steal, and yet they end up with a tiny little fine. So down here, crime does pay. I mean, who wouldn't spend two years in jail for a $7 million payout? Would I spend two years in jail for $7 million? Well, maybe. If I had conjugal visits in a private room, who knows? But back to that case of Costa Rica, three thieving presidents caught red-handed in 20 years. And for all intents and purposes, the first world thinks this country is the Switzerland of Latin America. And you'll read that claim in every folders and lonely planet guide. Talk about false advertising.

[22:00] So let me ask you now, when's the last time a real Swiss president skimmed a few million dollars and got a five-year jail sentence? I'm talking about the real Switzerland now. So when's the last time that happened? Try never. So when some country like Costa Rica gets favorably compared to Switzerland, just what the hell are they comparing? Okay, I think I've beaten that dead horse enough. Let's move on to something different. Now, in a recent show, I talked about how to protect your valuables if you're on the beach down here. And I gave a few suggestions on just what to do if you're going to go in the water and you have some valuables on you like passports or a wallet or some money. Now, I like Ziploc bags a lot, but I can't say that I trust somebody who tells me that they're actually waterproof. Though I guess if you bought the expensive heavy-duty freezer ones and you zipped one inside another and then maybe another,

[22:49] in other words, three Ziploc bags, that might actually give you pretty good waterproofing for a time. And that depends on what you're trying to waterproof and how heavy or bulky it might be. But thanks to one of my extra smart listeners out there, there's a product available for around 11 or 12 bucks that solves all your tricky waterproofing problems called a QuickTech dry bag. And it's a plastic pouch that goes around your belt that's about passport size or a little bigger. So you can put your passport and credit card and other small valuables inside and even a cell phone or a small camera or an iPod. And it comes with an adjustable waist belt. So you just slap it on and go swimming or snorkeling or whatever. Now, the listener advises that if you put something a little heavy in there, let's say like a cell phone or a camera,

[23:35] the weight of it jostling around just might cause it to leak. So it's a good idea to wrap all your stuff in a Ziploc bag first and then stick it in the pouch. That way, it's almost guaranteed not to leak. Kind of like using two condoms. So I'm really sold on this thing. And if you're interested in this item, it's called a QuickTech dry bag. And it's spelled K-W-I-K-T-E-K. That's QuickTech. And they make a lot of waterproofing products. But the QuickTech dry bag that I'm talking about is like a small deflated fanny pack. So it doesn't much get in the way at all. And guys, you can wear it either outside or inside your swimming trunks. And ladies, you're kind of stuck wearing it like a fanny pack. And note that the company QuickTech does make a waterproof bag like that that hangs around your neck by a chain and a metal clip.

[24:26] But I have to advise you against buying that one because who wants a bag like that, slapping around and scraping your chest and neck all day? Go ahead and look that stuff up on Google and you'll see what I mean. And now let's move on to another subject. Remember last week I was talking about cars? Well, after I put that show down, I happen to remember another little scam that's going around here that's pretty popular and for many car owners, pretty aggravating. And it's a kind of a very low budget theft that just doesn't seem to happen in the first world. And when it first happens to you, and it just might because it's very common, you just can't believe someone would go through the effort. Well, if you're an adolescent kid from about 12 to 16 years old, in the first world, your parents probably give you an allowance. Five or 10 or 20 bucks a week, I don't know what the going rate is.

[25:11] But as far as the kid's concerned, it's never enough, right? Well, down here, there's no such thing as an allowance. Not in the middle and lower classes anyway. So young kids like that have to find a way to scrounge up some dinero so they can buy, well, whatever kids at age buy. Cigarettes, playboys, ecstasy, who knows? And one of the most common ways young kids of the lower classes make a few bucks on the side, and you might call these kids borderline delinquents after I explain what they do. Anyway, they scope out the neighborhoods for late model cars and they look for those chrome car emblems like Chevrolet and Toyota and Honda and even better yet, Mercedes, BMW, Porsche and Audi. You know what I'm talking about. Anyway, these kids will walk by a car and when nobody's looking, one of them will pull out a little screwdriver

[25:58] and pry off that emblem and pocket it. And at the end of the day, they'll have a nice collection of those things and they'll go down to one of the sleazier sections that you'll find in almost every big Latin city where they sell lots of junk on the street, including radios and car parts and wire and electrical stuff and cell phones and black barriers and pirated DVDs. And in a place like that, you can find the strangest stuff and chances are if you need a part for your car, they'll have it there for about 20 to 40 percent of what you'd pay in the dealership. So expats and tourists, one day you're going to be walking back to your car and you're going to notice that one or more of your emblems are gone and a car without an emblem looks incomplete and ugly. So you're going to want to go get one right away. And when you go to the dealership and you find out it's about 35 bucks, you're going to remember seeing a stall in one of the sleazier sections of town

[26:47] that had emblems like that all over the place. And they're going to sell you an exact replacement for about five bucks. And there's a chance that you're going to buy back the one that got taken right off your car. So whether you buy one from a dealership for 35 bucks or from a little thief at a kiosk, make sure when you pop it back on your car you use some high strength double barrel epoxy or someone just might nab it again. And that's why when you drive down here long enough, you notice that as cars get older and older, more little chrome pieces like that go missing. And eventually, if your car is old enough, you get to the point that you just don't care anymore. And for an expat, I guess that's what you call going native. Because if I drove a car like that up in the first world, people would think I was white trash and I'm not necessarily denying that. You've been listening to The Expat Files, living in Latin America.

[27:39] And don't forget you can email me on anything at all about Latin America. The Expat Files at gmail.com. That's theexpatfiles at gmail.com. See you next time. Nos vemos.